Birkenfeld v Yachting New Zealand Inc (No 2) (CA)

IN THE COURT OF APPEAL OF NEW ZEALAND
CA263/07
[2007] NZCA 314

BETWEEN KIMBERLY BIRKENFELD
Applicant

AND YACHTING NEW ZEALAND INCORPORATED
Respondent

Hearing: 16 July 2007
Court: O'Regan, Ellen France and Wilson JJ
Counsel: Applicant in person
N A Beadle for Respondent
Judgment: 27 July 2007 at 11 am

JUDGMENT OF THE COURT

A The application for special leave is dismissed.
B The applicant must pay to the respondent costs of $750 plus usual disbursements.

REASONS OF THE COURT
(Given by Ellen France J)

Introduction

[1] This is an application under r 29(4) of the Court of Appeal (Civil) Rules 2005 for special leave to appeal out of time against a decision on costs delivered by Keane J on 7 March 2006: HC AK CIV 2005-404-438.

[2] The application is made on the basis that the appeal has merit, the delay in bringing the appeal is through no fault of the applicant, and there is no prejudice to the respondent in granting special leave.

[3] The application is opposed on the grounds that the subject matter of the appeal has already been considered by this Court, the appeal is without merit, and there is some prejudice to the respondent in granting special leave.

Background

[4] The applicant, Kimberly Birkenfeld, brought a claim against Yachting New Zealand Incorporated after a collision between its rigid inflatable boat and a windsurfer ridden by her. Yachting New Zealand sought a decree of limitation of liability under s 85 of the Maritime Transport Act 1994. Keane J made such a decree ([2005] NZAR 727) and, in a later judgment Keane J awarded costs to Yachting New Zealand.

[5] Ms Birkenfeld appealed unsuccessfully to this Court against the making of her decree. Her application for leave to appeal to the Supreme Court was also unsuccessful: Birkenfeld v Yachting New Zealand Inc [2007] 1 NZLR 596 (CA & SC).

[6] This Court discussed Keane J’s costs award in the course of the decision on Ms Birkenfeld’s appeal. The Court first noted Ms Birkenfeld’s criticism of the costs award in these terms:

[55] The appellant says no costs order should have been made against her in the High Court because she did not act unreasonably in her approach to the limitation claim.

[7] The Court then observed at [56] that Ms Birkenfeld had not filed on appeal against the costs award “so this matter is not properly before us”. The Court went on to address the merits of Ms Birkenfeld’s challenge to the costs award as follows:

[57] As to the merits of this challenge, the appellant relies on cases such as The “Kingston Diamond” (Limitation) [1964] 1 Lloyd’s Rep 384 (Admiralty). Hewson J in that case, at p 386, ordered the plaintiffs to pay the costs because the defendants had not acted unreasonably in resisting the limitation action.

[58] Meeson, at para [8.111], explains that cases like The “Kingston Diamond” reflected an earlier practice that the claimant pay the costs of limitation proceedings unless the defendant acted unreasonably in challenging the right to limitation. The practice changed in Groen v Owners of the ship England (No 2) [1972] 2 QB 399, where Dunn J took the view that, in contested cases, costs should follow the event.

[59] Meeson observes at para [8.112], however, that as the burden of proof in a contested limitation claim has now altered, there is no longer any justification for the earlier approach to costs. Hence, Meeson says: “… in a contested limitation claim the claimant is only required to pay the costs of obtaining a decree by establishing a prima facie right to limit his liability, and otherwise the costs follow the event in the limitation claim so that ‘the claimant must pay the costs of investigating and determining the facts which the Convention provides that he must prove if, at the end of the day, he fails to establish those facts’.

[60] The latter quote is taken from The “Capitan San Luis” [1993] 2 Lloyd’s Rep 573 (QB Admiralty), which is also relied on by the appellant. In the present case, the respondent (the claimant) did prove the relevant facts in the High Court. In those circumstances, Keane J was right that costs followed the event.

[8] The Supreme Court in its judgment refusing leave simply recorded at [1] that costs awards had been made against Ms Birkenfeld by both the High Court and this Court.

[9] Subsequently, Yachting New Zealand has offered to pay Ms Birkenfeld the full amount available to her in terms of the limitation judgment, together with interest and costs to which she is entitled on a 2B basis. Yachting New Zealand says that, in calculating the sum offered, it has deducted the awards of costs in its favour in the various hearings. The offer has not been accepted and Yachting New Zealand has sought a stay of Ms Birkenfeld’s action. A hearing on the stay action has taken place in the High Court and judgment has been reserved.

Discussion

[10] The Court may grant special leave to appeal out of time when granting leave would meet the overall interests of justice: Havanaco Ltd v Stewart (2005) 17 PRNZ 622 at [5] (CA). As the authors of McGechan on Procedure observe, leave will not be granted where the appeal appears to be hopeless: [CR29.04(h)] with reference to Prudential Building and Investment Society of Canterbury (In liquidation) v Hankins (1991) 5 PRNZ 160 at 162 (HC).

[11] Assuming that we have jurisdiction in this case to grant special leave, we are satisfied that the overall interests of justice do not require the grant of leave. Leave should be declined because the appeal is hopeless.

[12] Ms Birkenfeld’s position is that on the authorities dealing with the Convention on Limitation of Liability to Maritime Claims 1976, costs do not follow the event. Rather, she says that the invariable practice is that the person in Yachting New Zealand’s position bears the cost of establishing their entitlement to limitation. Ms Birkenfeld relies on cases such as The “Capitan San Luis” [1993] 2 Lloyd’s Rep 573 (QB Adm), The “Hans Hoth” [1952] 2 Lloyd’s Rep 341 (Adm), The “Kingston Diamond” (limitation) [1964] 1 Lloyd’s Rep 384 (Adm) and The“Tasman Pioneer” [2003] 2 Lloyd’s Rep 713 at 727 (NZHC).

[13] Ms Birkenfeld challenges the application of the authorities relied on by this Court in its earlier discussion of the issue for the proposition that the practice as to the award of costs has changed. She says that the authorities referred to only apply to cases where the limitation decree is contested under s 85(2) of the Maritime Transport Act. (Section 85(2) provides that no person is entitled to limitation where the loss, injury or damage resulted from an intentional or reckless act.) Ms Birkenfeld did not contest the matter on that basis. Rather, she says, she contested the matter on the grounds that the requirements as to the provision of information to her had not been met. Ms Birkenfeld maintained she was entitled to take that position and should not have been penalised for doing so.

[14] Keane J indicated in his substantive decision that it appeared Yachting New Zealand was entitled to costs but he allowed the parties to file further submissions which they did. The Judge concluded that Yachting New Zealand was obliged to apply for the decree when Ms Birkenfeld, being represented by counsel, was unwilling to concede limitation although knowing exactly what Yachting New Zealand’s grounds were. The Judge noted that these grounds had been set out “exhaustively” in a solicitor’s letter dated 26 January 2005. Before the fixture before him, the Judge said Ms Birkenfeld had Yachting New Zealand’s “complete position” (at [5]).

[15] Keane J awarded costs on a 2B basis together with disbursements in favour of Yachting New Zealand. In doing so he rejected Ms Birkenfeld’s claim that she had not been given sufficient information and Yachting New Zealand’s application for indemnity costs or costs on a 3C basis.

[16] As the respondent correctly points out, the authorities like The “Kingston Diamond” relied on by Ms Birkenfeld reflect the position under the earlier Limitiation Convention when the person seeking the decree of limitation had the onus. Clarke J makes the same point in The “Capitan San Luis” at 578. The position under the 1976 Convention, reflected in New Zealand in s 85(1) of the Maritime Transport Act, is that the ship owner is entitled to the decree in relation to the specified claims except in certain prescribed circumstances.

[17] In any event, even in the other cases relied on by Ms Birkenfeld, it is plain that the Judge still retains a discretion to award costs in a different way, for example, where a defendant has acted unreasonably. In the current case, there is no basis to suggest that it was not open to Keane J to exercise his discretion in favour of Yachting New Zealand. Prior to the hearing, Yachting New Zealand made its position quite clear and Ms Birkenfeld continued to challenge Yachting New Zealand’s entitlement to a decree of limitation. She was of course entitled to do so but in doing that she took on the risk that she might incur costs as a result. The fact that she challenged Yachting New Zealand on a basis other than s 85(2) is not material. Indeed, her recognised inability to rely on s 85(2) is an indication of the weakness of her challenge.

[18] For this reason, we decline to grant special leave to appeal out of time.

Costs in this Court

[19] There is no reason why costs in this Court should not follow the event. In the circumstances, we will make an award to the respondent of $750 and the usual disbursements.

Solicitors:
DLA Phillips Fox, Auckland for Respondent